The Federal Government is soliciting input from Canadians on various financial matters including what we would like to see in the upcoming and future budgets (Details on how to respond and the deadline can be found here). I intend to send the following comments:
- Keep the income tax cuts: Personally, I prefer a cut in my income tax to a cut in the GST but any tax cut is welcome. The previous government cut personal income taxes to the tune of about $350 per taxpayer. As recent press reports indicate that the federal government is expected to post another surplus, the upcoming budget should keep the income tax cuts.
- Introduce a Registered Lifetime Savings Plan (RLSP): RRSPs may not be a suitable vehicle for low-income Canadians to save for their retirement. A new RLSP plan, contributions to which are not tax-deductible but withdrawals are not taxed would be a welcome move.
- Scrap the Canada Savings Bond (CSB) program: The CSB program has become expensive to run and Canadians only hold about 1% of their investment assets in such bonds as other competing options have become available.
- Introduce a real-return savings bond program: To encourage more Canadians to save for their retirement, the government could introduce a new savings bond program, which offers a fixed rate of return and adjusted for inflation every year.
- Tax credit for buying hybrid vehicles: A tax credit to offset the higher costs involved in purchasing a hybrid vehicle would offer a financial incentive to be friendly to the environment.
- Phase-out the 22% tax bracket: Revive the idea to gradually eliminate the 22% tax bracket for those earning between $35K-$70K. A significant tax cut for middle class Canadians could hardly be called a tax cut for the rich.
Related: Jonathan Chevreau’s Ottawa wants your advice column from the Financial Post.
